Computer-Implemented Method For Evaluating an Investment

ABSTRACT

A computer-implemented method and tool for evaluating an investment includes functionality that generates and stores data representing values/dates of a plurality of inflows and outflows over the investment period. Such data is used to derive first values that represent expected benefits over corresponding intervals of the investment period. A first net present value result is generated by discounting some or all of the first values, and then stored for output as part of the investment evaluation. The first values account for at least one of: i) interest payments and credits on calculated daily bank account balances (CDBAs) derived from the data; ii) tax payments due on CDBAs derived from the data; iii) VAT payments derived from portions of the data corresponding to forecasted sales of the investment, iv) income tax payments derived from said data, and v) allocation of forecasted net income into a plurality of predetermined categories.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation of U.S. application Ser. No.11/279,259, filed Apr. 11, 2006, issued as U.S. Pat. No. 7,668,768, onFeb. 23, 2010, which claims benefit from Greek Patent Application No.20050100192, filed on Apr. 14, 2005, both of which are herebyincorporated herein by reference in their entireties.

BACKGROUND OF THE INVENTION

1. Field of the Invention

This invention relates broadly to computer-implemented financialanalysis. More particularly, this invention relates tocomputer-implemented financial analysis methodologies for determiningthe profitability and the present value of an investment or entity overan investment period as well as products and systems based thereon.

2. State of the Art

In business, people often are confronted with the evaluation of theimpact of an economic investment, which is a series of forecastedactions and events that produce and/or sell goods or services over apredetermined investment period. Such an economic investment can be partof an investment plan or an annual budget. In order to do evaluate theeconomic investment, a financial analyst (or a group of analysts)typically identifies and budgets incidents with respect to involvedactivities/departments (e.g., sales, production, expenses, purchases,payroll, collections, payments, etc). The incident values are used tocalculate the profit and loss of the investment over the investmentperiod. A net present value result is calculated based upon individualcash flow collections and payments. This net present value resultprovides a single monetary figure that characterizes whether theexpected monies generated by the investment over the investment periodwill exceed the monies that are required to be paid out during theinvestment period. In this manner, the net present value result providesmeaningful information that is often used as an important point indeciding whether or not the investment should be made.

Typically, the net present value result is derived by modeling theinvestment as a sequence of positive and negative cash collections. Thecash collections (positive values) and payments (negative values) arediscounted into their equivalents as of the date of the beginning of theinvestment, after taking into consideration the appropriate discountrate. That is to say in simple terms, if an annual interest rate of 10%is assumed, then the possession on Jan. 1, 2006 of a sum of 100 EUR isequivalent with the future collection of a sum of 105 EUR after 6months. With this method, all cash collections and payments arediscounted into net present values, and in the end they are added up. Ifthe result is positive, the investment is profitable, while if it isnegative it is a loss maker.

The general mathematical formula that is used to discount a future cashflow to its net present value is the following: the future cash flow isdivided with a factor, which is the number 1 plus the interest rate ofinterest bearing period, but only after the factor is raised to the vpower, where v is the total number of interest bearing periods. Theresult of that division is the net present value of the cash flow.

Such prior art net present value methodologies have significantlimitations. First, implementation of the methodology is exceptionallydifficult for complex investments that produce a large number offinancial incidents over numerous dates. Second, the methodology is byits own nature exceptionally inaccurate, because situations withdistinct differences are handled in the same manner. Moreover, there areoften real and usual (even daily) situations for which it cannot give asuitable answer because of the inaccuracies built into the method.Finally, the method is incapable of generating a suitable answer forlarge investments because of the inaccuracies built into the method.

For example, the following real-life scenarios depict limitations of theprior art methodologies.

-   1. As a consequence of the multiple daily collections and payments,    it is possible that for some days of the month the investment's bank    account will have a negative cash balance and accordingly produce an    interest expense (typically at a 6% interest rate for current    lending rates), while certain other days of the month the    investment's bank account will have a positive cash balance and    accordingly produce interest income (typically at a 0.5% interest    rate for current bank rates). The prior art methodologies are unable    to and fail to determine daily bank account cash balances and thus    are unable to determine if and when to apply such interest payments    and interest credits. Such inabilities limit the accuracy of the    underlying net present value calculation and analysis.-   2. Similarly, under certain circumstances such as when the    accounting balance (and not the valeur balance) is negative for the    last calendar date of a given month, an additional tax contribution    may be due by applicable tax statutes (e.g., the Greek Tax Law    128/75). Such tax contributions constitute a cash flow (expense).    The prior art methodologies do not account for such tax    contributions, which limit the accuracy of the underlying net    present value calculation and analysis.-   3. Similarly, from the interest income note in 1 above, there is a    withholding of income tax from the bank at the date of interest    calculation (a negative cash flow). Such income tax withholding is    typically offset to a later date for year end tax calculations. The    prior art methodologies do not account for such interest income and    the tax consequences associated therewith, which limit the accuracy    of the underlying net present value calculation and analysis.-   4. The yearly net income of the investment is typically allocated    into categories including a reserve fund, distributed dividends and    retained earnings. The reserve fund carries over from year to year.    Similarly, the retained earnings carry over into the following year    and can be used for capital expenditures or other needs. The reserve    fund and retained earnings remain in the entity. Thus, these    accounts can affect the interest expense and/or interest income of    the investment. Until their date of payment, distributed dividends    can also affect the interest expense and/or interest income of the    investment. The prior art methodologies do not account for such net    income allocation and the interest credits and expenses associated    therewith, which limit the accuracy of the underlying net present    value calculation and analysis.-   5. With regard to the monthly VAT payments, it is possible for a    negative payment amount to be calculated in certain months, which    means that negative payment is going to be carried forward in next    month's payment, with financially beneficial results for the entity.    The prior art methodologies do not account for such monthly VAT    payments and the financial benefits associated therewith, which    limit the accuracy of the underlying net present value calculation    and analysis.

Thus, there remains a need in the art for improved financial analysismethodologies and tools that evaluate economic investments in a mannerthat is suitable for complex investments and in a manner that providesaccurate results over a wide range of investments including complex andlarge investments.

SUMMARY OF THE INVENTION

It is therefore an object of the invention to provide a financialanalysis methodology (and a tool based thereon) that evaluates aneconomic investment in a manner that is suitable for complexinvestments.

It is another object of the invention to provide such a financialanalysis methodology (and a tool based thereon) that provides accurateresults over a wide range of investments, including complex and largeinvestments.

It is a further object of the invention to provide such a financialanalysis methodology (and a tool based thereon) that accounts for dailycalculations of a bank account, bank account interest payments andcredits as well as bank account tax payments that may arise as theinvestment collects monies (e.g., calculated inflows) and pays monies(e.g., calculated outflows) over its investment period.

It is yet another object of the invention to provide such a financialanalysis methodology (and a tool based thereon) that allows forallocation of the calculated net income into predetermined categories(e.g., distributed dividends, retained earnings, reserve fund), whereincertain categories (e.g., distributed dividends) contribute to the netpresent value of the investment and other categories (e.g., retainedearnings, reserve fund) do not contribute to the net present value ofthe investment over certain parts of the investment period butcontribute later.

It is also an object of the invention to provide such a financialanalysis methodology (and a tool based thereon) that accurately accountsfor value-added tax payments paid by the investment over the investmentperiod.

It is still another object of the invention to provide such a financialanalysis methodology (and a tool based thereon) that accurately accountsfor calculated income taxes paid over the investment period.

In accord with these objects, which will be discussed in detail below, acomputer-implemented method and corresponding tool includessoftware-based functionality that characterizes whether the expected netpresent value of monies generated by an investment over an investmentperiod will exceed the net present value of monies that are required tobe paid out during the investment period. Such software-basedfunctionality derives and stores forecasted and calculated inflows andforecasted and calculated outflows over the investment period. Theinflows and the outflows are stored and managed in one or more computerdata structures. The calculated inflows are derived from one or more ofthe following: i) forecasted sales of the investment over the investmentperiod, ii) calculated bank account interest credits of the investmentthat are to be collected over the investment period, and possibly iii)other forecasted and/or calculated inflows of the investment that are tobe collected over the investment period. The calculated outflows arederived from one or more of the following: i) forecasted and/orcalculated incidents (e.g., inventory costs, labor cost, overhead)related to costs of goods or services sold of the investment over theinvestment period, ii) forecasted and/or calculated expenses of theinvestment over the investment period, iii) forecasted depreciation offixed assets of the investment over the investment period, iv)calculated value-added tax payments of the investment that are to bepaid over the investment period, v) calculated income tax payments ofthe investment that are to be paid over the investment period, vi)calculated bank account interest debits of the investment that are to bepaid over the investment period, vii) calculated bank account taxpayments of the investment that are to be paid over the investmentperiod, and possibly viii) other forecasted and/or calculated outflowsof the investment that are to be paid over the investment period. Thefunctionality processes the forecasted and/or calculated inflows and theforecasted and/or calculated outflows to derive a net income for eachyear in the investment period. An allocation rule is used to apportionthe net income for each given year to predefined accounts. Suchpredefined accounts may include distributed dividends, retainedearnings, and possibly reserves. The distributed dividends represent aportion of the profits of the investment that is shared by theinvestor(s) for the given year. Retained earnings represent a portion ofthe profits of the investment that is kept for future use or investment.Reserves represent a portion of the profits of the investment that mustbe reserved as dictated by statutory regulations or possibly otherrules. The net income portions that are allocated to certain accounts(e.g., net income allocated to distributed dividends) for each givenyear over the investment period and possibly the value of other itemsthat exist at the end of the investment period are discounted to theirnet present value as of the starting date of the investment. This firstnet present value result is used to evaluate the investment.

In the preferred embodiment, a comparison is made between the first netpresent value result and a second net present value resultcharacterizing the money payments (or possibly other items) that will bepaid/contributed to the investment over the investment period by theinvestor or investing entity. This comparison can be realized bysubtracting the second net present value from the first net presentvalue and outputting (e.g., by display or by a printed report) theresult to the user. If the result is positive, the investment isprofitable, while if it is negative it is a loss maker. The magnitude ofthe result characterizes the amount of forecasted profit (or loss) ofthe investment over the investment period.

Additional objects and advantages of the invention will become apparentto those skilled in the art upon reference to the detailed descriptiontaken in conjunction with the provided figures.

BRIEF DESCRIPTION OF THE DRAWINGS

FIGS. 1A-1C, collectively, is a flow chart of a computer-implementedmethodology for evaluating an investment in accordance with the presentinvention.

FIGS. 2A-2Z2, collectively, are schematic representations of exemplarycomputer files for carrying out the computer-implemented methodology ofFIGS. 1A-1C.

FIGS. 3A-3B are schematic representations of the computer files of FIGS.2G and 2H for use in an illustrative application.

FIG. 4 is a functional block diagram of an exemplary computer processingsystem in which the present invention can be embodied.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

Turning now to FIG. 4, there is shown an exemplary computer system thatcan be used to execute the computer-implemented financial analysismethodologies of the present invention as described herein. The computersystem can be any of a number of computer devices including a personalcomputer, laptop, workstation, server and the like. The computer systemincludes a central processor unit 51 that is interfaced to memory 53 byinterface logic 55. The memory 53, which is typically realized bypersistent memory (such as one or more ROM memory modules and/or one ormore flash memory modules) as well as non-persistent memory (such as oneor more DRAM modules), stores an operating system 57 as well as anapplication 99, which is referred to below as the “investment evaluationvalue application”. The central processor unit 51 also interfaces to adisplay device 61 (e.g., a liquid crystal display panel), a keypad orkeyboard 63 and/or other user input device (e.g., a touch screendisposed on the display device 61) and possibly other devices (e.g., amicrophone for voice input and one or more speakers for voice/audiooutput. The central processor unit 51 may also interface to acommunication subsystem 69 that provides for bidirectional communicationwith a communication network (e.g., a local area network and/or a widearea network, such as the Internet). The operating system 57 and theinvestment evaluation application 99 are typically stored in a storagedevice, such as magnetic disk drive or disk array (not shown), andloaded into memory 53 as needed. The investment evaluation application99 may also be stored on a program storage device (e.g., an opticalstorage disk such as a CD-ROM or DVD) and loaded/installed onto thestorage device of the computer system 50 via an optical disk drive orthe like. The investment evaluation application 99 may also be stored ona remote computer and loaded/installed onto the storage device of thecomputer system 50 via the communication network (e.g., downloaded overthe Internet).

The investment evaluation application 99 includes software-basedfunctionality that characterizes whether the expected net present valueof monies generated by an investment over an investment period willexceed the net present value of monies that are required to be paid outduring the investment period. Such software-based functionalitycalculates and stores forecasted and/or calculated inflows andforecasted and/or calculated outflows over the investment period. Theinflows and outflows are stored and managed in one or more computer datastructures stored on the computer system 50 or accessible therefrom.Such data structures can be one or more data files, one or more datatables stored as part of a relational database, or any other datastructure used to persistently store data. The forecasted and/orcalculated inflows are derived from one or more of the following: i)forecasted sales of the investment over the investment period, ii)calculated bank account interest credits of the investment that are tobe collected over the investment period, and possibly iii) otherforecasted and/or calculated inflows of the investment that are to becollected over the investment period. The forecasted and/or calculatedoutflows are derived from one or more of the following: i) forecastedand/or calculated incidents (e.g., inventory costs, labor cost,overhead) related to costs of goods or services sold of the investmentover the investment period, ii) forecasted and/or calculated expenses ofthe investment over the investment period, iii) forecasted depreciationof fixed assets of the investment over the investment period, iv)calculated value-added tax payments of the investment that are to bepaid over the investment period, v) calculated income tax payments ofthe investment that are to be paid over the investment period, vi)calculated bank account interest payments of the investment that are tobe paid over the investment period, vii) calculated bank account taxpayments of the investment that are to be paid over the investmentperiod, and possibly viii) other forecasted and/or calculated outflowsof the investment that are to be paid over the investment period. Theapplication 99 processes the forecasted and/or calculated inflows andthe forecasted and/or calculated outflows to derive a calculated netincome for each year in the investment period. An allocation rule isused to apportion the calculated net income for each given year topredefined accounts. Such predefined accounts may include distributeddividends, retained earnings, and possibly reserves. The distributeddividends represent a portion of the profits of the investment that isshared by the investor(s) for the given year. Retained earningsrepresent a portion of the profits of the investment that is kept forfuture use or investment. Reserves represent a portion of the profits ofthe investment that must be reserved as dictated by statutoryregulations or possibly other rules. The net income portions that areallocated to certain accounts (e.g., net income allocated to distributeddividends) for each given year over the investment period and possiblythe value of other items that exist at the end of the investment periodare discounted to their net present value as of the starting date of theinvestment. This first net present value result is used to evaluate theinvestment.

In the preferred embodiment, a comparison is made between the first netpresent value result and a second net present value resultcharacterizing the money payments (or possibly other items) that will bepaid/contributed to the investment over the investment period. Thiscomparison can be realized by subtracting the second net present valuefrom the first net present value and outputting (e.g., by display or bya printed report) the result to the user. If the result is positive, theinvestment is profitable, while if it is negative it is a loss maker.The magnitude of the result characterizes the amount of forecastedprofit (or loss) of the investment over the investment period.

In the preferred embodiment, the software-based functionality of theinvestment evaluation application 99 embodies the methodology shown inFIGS. 1A through 1C and described below in more detail. The methodologybegins in block 101 wherein the data stored in one or more master filesis initialized. The one or more master files store necessary data thatis used in the operations of the application 99, such as dataidentifying the working days in each year of the investment period,income tax payment installment dates and values, item codes for stockmaterials and other warehouse items used in manufacturing, stock levelpolicies for the warehouse items which define the respective quantitylevels of the warehouse items that trigger restocking and thecorresponding restocking quantity and possibly other inventoryinformation, data that defines the allocation rule for net income asdescribed herein, and/or possibly other data. Such data can be initiallyset to a default value and updated by user input, or can be set to apredefined value by design.

In block 103, the operations collect forecasts of financial incidentsrelevant to the investment or entity (e.g., forecasted sales, forecastedexpenses, fixed assets for the investment, depreciation schedules orrule(s) for the fixed assets, stock materials and other warehouse itemsfor production and other information related thereto, etc). Suchcollection can be accomplished by a graphical user interface providingfor user input, by batch loading of such data from a file, or by othersuitable means.

In block 105, a value and date for each forecasted sale as defined bythe data stored in block 103 is added to an event list. For instanceswhere VAT taxes are applicable, the value added tax collected as part ofthe sale could be calculated and included in the value of the forecastedsale. For example, consider a value added tax of 9% for at item sold for100 EUR. The VAT tax would be (100*0.09) EUR=9 EUR, and the value forthe sale of the item would be (100+9) EUR=109 EUR.

For manufacturing-type investments and entities, optional block 107 maybe carried out to collect or generate a list of warehouse item costs(e.g., raw material costs), associated direct labor costs and associatedoverhead costs that are required to meet the forecasted sales incidentsas defined by the data stored in block 103. In the preferred embodiment,the required warehouse item costs also satisfy constraints that aredictated by the stock level policies of the master file as initializedin block 101. The warehouse item costs, direct labor costs and overheadcosts are then added as values and dates to the event list.

The operations of block 107 can be adapted for different types ofinvestments. For example, service-type investments or entities typicallydo not manufacture a product and thus the financial analysis typicallydoes not involve forecasted warehouse items. In such instances, theoperations of block 107 can be adapted to collect and store forecastedlabor costs and forecasted overhead costs over the years of theinvestment. Similarly, merchandizing-type investments or entitiestypically do not manufacture a product and thus the financial analysistypically does not involve warehouse items. In these instances, theoperations of block 107 can be adapted to collect and store stockpurchase costs over the years of the investment period.

In block 109, the operations calculate a costs of goods sold value foreach year of the investment period. For manufacturing-type investmentsand entities, the cost of goods sold for a given year is preferablyderived from the data derived and stored in block 107 as follows:

(value of the warehouse item inventory at the start of the givenyear)+(calculated warehouse item costs for the given year)−(value of thewarehouse item inventory at the close of the given year)+(forecastedlabor costs for the given year)+(forecasted overhead costs for the givenyear).

Other cost of goods calculations can be used as well. For example, worksin progress inventory and finished product inventory can be modeledthroughout the year and valued as part of the costs of goodscalculation. For service-type investments or entities, the costs ofgoods sold becomes costs of service sold, which is typically calculatedby adding the labor costs for the given year to the overhead costs forthe given year. For merchandizing-type investments or entities, the costof goods sold is typically derived by adding the following:

(value of the stock inventory at the start of the givenyear)+(calculated stock purchase costs for the given year)−(value of thestock inventory at the close of the given year).

Other costs of goods sold calculations can be used as well.

In block 111, the operations calculate gross profits for each year ofthe investment period. In the preferred embodiment, the gross profitsfor a given year is derived as follows:

(forecasted sales for the year)−(costs of goods sold for the year ascalculated in block 109).

Other gross profit calculations can be used as well.

In block 113, a value and date for each forecasted expense as defined bythe data stored in block 103 is added to the event list.

In block 115, depreciation values and dates for each fixed asset asdefined by the data stored in block 103 are generated and added to theevent list. Preferably, the depreciation values and dates for the fixedassets of the investment are derived from a depreciation schedule orrule defined by the data stored in block 103.

In block 117, if applicable, VAT payment values and dates are calculatedbased upon the forecasted sales of the investment as defined by the datastored in block 103. Preferably, the VAT payment values are derived foreach given sale by multiplying the sales price times a predetermined VATpercentage value (e.g., 9%). The date for a given VAT payment ispreferably defined by the applicable tax statute (e.g., under the taxlaws of Greece, VAT payments are due on the 25^(th) of the monthimmediately following the invoice issue date). VAT values and dates arecalculated based upon the forecasted and/or calculated purchases andexpenses of the investment. Typically, a negative monthly VAT balance(payments−credits) is carried over into the next month. The VAT paymentsand credits (values and dates) are added to the event list. Other taxpayments (e.g., social security payments) can also be added as valuesand dates to the event list.

In blocks 119 to 147, the operations perform a nested loop over theyears, months and working days of the investment period. Blocks 123 to133 define an inner loop that is performed for each working day of theinvestment period. Blocks 121 to 137 define an intermediate loop that isperformed for each month of the investment period. And blocks 119 to 147define an outer loop that is performed for each year of the investmentperiod.

As part of this inner loop, block 125 calculates a daily balanceadjustment based upon the sales, warehouse inventory purchases,expenses, fixed asset depreciation values, tax payments and possiblyother values stored in the event list. Preferably, the daily balanceadjustment is calculated for a given working day by subtracting thedebit values of the event list for the given working day from the creditvalues of the event list for the given day. In block 127, a bank accountbalance is updated by adding the daily balance adjustment to the openingday's balance, which is carried forward from the previous day's closingbalance. In block 129, it is determined whether the bank account balancefor the given working day is negative. If so, a bank account interestpayment is calculated for the given working day (preferably, bymultiplying the bank account balance by a predetermined interest ratepercentage as defined in block 101), the bank account interest paymentis deducted from the bank account balance, and the bank account interestpayment is added as a value and date to the event list. In block 131, itis determined whether the bank account balance for the given working dayis positive. If so, a bank account interest credit is calculated for thegiven working day (preferably, by multiplying the bank account balanceby another predetermined interest rate percentage as defined in block101), the bank account interest credit is added to the bank accountbalance, and the bank account interest credit is added as a value anddate to the event list. Other suitable calculations can be used as well.For example, similar bank account interest payment and creditcalculations can be calculated on the month end bank account balance aspart of the loop of blocks 121 to 137.

As part of the intermediate loop of blocks 121 to 137, block 135determines whether the bank account balance at the end of a given monthis negative. If so, a tax payment, under certain laws such as a 128/75tax payment due under Greek law, may be due. In this case, the resultingtax payment is calculated (preferably, by multiplying the bank accountbalance for the given month by a predetermined tax rate as defined inblock 101), the tax payment is deducted from the bank account balance onits proper date, and the tax payment is added as a value and date to theevent list.

As part of the outer loop of blocks 119 to 147, block 139 calculates andstores the taxable income of the investment for the given year. Thistaxable income calculation is preferably derived as follows:

(Gross Profits for given year YRi)−(Deductible Expenses forYRi)−(Deductible Tax Payments for YRi)+(Non-Deductible Bank AccountInterest Credits for YRi)−(Deductible Bank Account Interest Payments forYRi)−(Deductible Bank Account Tax Payments for YRi)

Other suitable calculations can be used as well.

In block 141, the final income tax payment for the given year iscalculated and stored based upon the taxable income calculated in block139. Preferably, the final income tax payment for the given year iscalculated by subtracting the income tax installments paid in the givenyear from the taxable income calculated in block 139. The final incometax payment is added as a value and date to the event list. In addition,the income tax installments that are to be paid in the following yearare calculated and stored (preferably, in accordance with a given rulesuch as a predetermined percentage of the taxable income paid in thegiven year). Such income tax installments are then added as values anddates to the event list.

In block 143, the net income for the given year is calculated preferablyby adjusting the taxable income as derived in block 139 to reflect thetotal income tax paid for the given year as well as other non-deductibleexpenses and outflows and other deductible credits and inflows.Preferably, the net income for the given year is calculated as follows:

(Taxable Income for given year YRi)−(Non-Deductible Expenses ForYRi)+(Deductible Bank Account Interest Credits For YRi)−(Non-DeductibleBank Account Interest Payments For YRi)−(Non-Deductible Tax Payments ForYRi)−(Income Tax Payments For YRi)

Other suitable net income calculations can be used as well.

In block 145, the net income as calculated in block 143 is allocated topredefined accounts in accordance with an allocation rule defined inblock 101. The value of each account for the given year is updated, ifnecessary, and stored. In the preferred embodiment, such predefinedaccounts include distributed dividends, retained earnings, and possiblyreserves as described above.

After completing the outer loop, the operations continue to block 149 tocalculate a first net present value for the investment. Preferably, thefirst net present value is based on the net income portions that areallocated to certain accounts (e.g., net income allocated to distributeddividends) over the investment period in block 145, possibly the valueof other items (fixed assets, reserve fund, retained earnings, bankaccount balance) that exist at the end of the investment period, andpossibly the value of other derivative cash flows (payment of income taxand payment of dividends or other collections and/or payments) thatremain to take place after the investment period. In particular, eachone of these values is discounted to its net present value as of thestarting date of the investment and added together to store a resultantsum, which is the first net present value. This first net present valueresult is preferably output to the user (e.g., via display or printedreport) for use in evaluating the investment.

Finally, in block 151, a comparison is made between the first netpresent value result of block 149 and a second net present resultcharacterizing the money payments (or possibly other items) that will bepaid/contributed to the investment over the investment period. Inparticular, each one of these money payments or other items isdiscounted to its net present value as of the starting date of theinvestment and added together to store a resultant sum, which is thesecond net present value. The comparison of block 151 is preferablyrealized by subtracting the second net present value from the first netpresent value and outputting (e.g., by display or by a printed report)the result to the user. If the result is positive, the investment isprofitable, while if it is negative it is a loss maker. The magnitude ofthe result characterizes the amount of profit (or loss) of theinvestment over the investment period.

The operations of FIGS. 1A-1C as described above can be realized by awide variety of programming environments, languages and/or dataconstructs. An exemplary realization is illustrated by the schematicdiagrams of FIGS. 2A-2Z2, which describe a set of computer files thatare part of an application written in the widely known computerprogramming language TURBO BASIC. This TURBO BASIC application carriesout the operations of FIGS. 1A-1C as described herein.

Note that the symbols #1, #2 and so on, correspond to channels ofcommunication with their respective computer files. Names such as FA01$,FB01$ etc are the names of the fields in the files. In the end of eachfile, field FILXX$ (where XX is the number from the correspondingchannel of communication) is empty space (filler), and field VLXX$(where XX is the number from the corresponding channel of communication)is the field that shows if the particular entry is active or voided.

As shown in FIG. 2A, the file set includes a “SYSTEM.INF” file, which isto say the code list of the code lists. It includes basic informationsuch as the name of code file (FA01$), and how many entries have beenadded up to that moment in this code file (FA02$). The number of theline of registration corresponds to the number of the channel ofcommunication.

The file set also includes at least one calendar master file as shown inFIG. 2B, which describes the days in a given year of the investmentperiod. Note that field FB03$ indicates if the particular day is aworking day or not, and is used to identify working days in the innerloop of blocks 123 to 133. The fields FB04$ and FB05$ are used to storecalculated bank account interest credits and payments, respectively,over the investment period. These bank account interest values andcorresponding dates that are stored in the file of FIG. 2B are used inblock 125 to adjust the bank account of the investment on its properdate.

The file set also includes at least one income tax schedule master fileas shown in FIG. 2C, which defines the month and day values that incometax installments are to be paid over the investment period. Thisinformation is used in block 117 and in block 141 to calculate andrecord scheduled income tax payments.

The file set also includes an inventory item mater file as shown in FIG.2D, which includes codes (field FD01$)) for raw material, products,packaging materials etc) and a stock level policy of each code (fieldsFD07$ to FD11$). This file also defines expenses. Note that inventoryitems and expenses are distinguishable by the value of field FD12$.

The file set also includes an inventory analytical file as shown in FIG.2E, which maintains (in no particular) order the sales entries of block105. These entries are sorted by date (FE04$) to generate the sortedanalytical file of FIG. 2F. The daily balances of the file of FIG. 2Fand the information of FD07$-FD11$ is used in block 107 to calculate therequisite warehouse item purchases, which are added as entries in thefile of FIG. 2E. The file of FIG. 2E is sorted again by date (FE04$) togenerated the sorted file of FIG. 2F. As part of block 111, theinformation in the file of FIG. 2F is used in conjunction with agenerally acceptable accounting method (such as FIFO, Mean Average oranother equivalent) to calculate the residual value of year end stock.

The file set also includes an impact code master file and a movementcode master file as shown in FIGS. 2G and 2H, respectively, whichcollectively define dates and effects that various forecasted incidentswill have in calculating the bank account balance and the profit andloss of the investment. The impact codes of FIG. 2G define the dates forsuch incidents and the periodicity of payment (bimonthly, quarterly,semi-annual, annual etc). The movement codes of FIG. 2H define theeffect of such incidents on the bank account balance of the investment,such as whether it has an effect on the profit and loss account (FH02$)and the relative percentage of it, if it is an advance payment of incometax (FH03$), if it is a reserve fund (FH14$), if it is an expense thatis income tax wise non-deductible, and the relative percentage of it(FH15$). The movement codes are also linked to the corresponding impactcodes (FH04$, FH06$, FH08$, FH10$, FH12$) as well as define thecorresponding sum of cash flow that is created, as a percentage of theregistered sum (FH05$, FH07$, FH09$, FH11$, FH13$). An exemplarydescription of the information contained in the impact code master fileand a movement code master file is shown in FIGS. 3A and 3B.

The file set also includes a bank interest rate master file as shown inFIG. 21, which defines the interest rates for the calculation ofinterest on the bank account balance (FI03$, FI05$) as part of block129, with indication of date from and until (FI01$, FI02$), thepercentage for the calculation of tax contribution of law 128/75(FI043$) as part of block 135, the rate for the retaining of income taxon interest income (FI06$) as part of block 131, the days of valeur forcheck deposits (FI07$), which is the number of days before interestcredits are realized with respect to a deposit of a customer's check andused in block 125, and the days of valuer for check payments (FI08$),which is the number of days before interest payments are realized withrespect to a check payment sent to a supplier and used in block 125.

The file set also includes an interest bearing period master file asshown in FIG. 2J, which describes the time periods in which interest ischarged and/or credited to the bank account balance of the investment.Field FJ02$ is the flag the program puts when the interest calculationof this period has been performed. This information can be used todictate when bank account interest and credit calculations areperformed.

The file set also includes a gross income calculation file as shown inFIG. 2K, which stores information generated in blocks 105 and 107(sales, purchases and year opening balances) which is derived from thedata stored in the event archive file of FIG. 2L. It also stores theyear end valuation of residual stocks, which is calculated in block 109.In this manner, the balance of this file is the gross operating incomeof the investment.

The file set also includes an event archive file as shown in FIG. 2L,which contains the forecasted data (i.e. forecasted sales and expenses)as well as other data that the application calculates (such as VATpayments, income tax payments, etc.).

The file set also includes a bank account master file as shown in FIG.2M, which defines the period for bank account interest calculations(e.g., calculate interest every X number of months).

The file set also includes two sorted bank account files as shown inFIGS. 2N and 20. The file of FIG. 2N maintains bank account entries inno particular order. These entries are sorted by accounting date (FN01$)to generate the file of FIG. 2O, which is used in block 135. The file ofFIG. 2N is sorted by value date (FN02$) to generate the file of FIG. 2P,which is used in blocks 129 and 131. An example that illustrates thedifferences and the use of the bank account files of FIGS. 2N, 2O and 2Pfollows:

Accounting Sum Sum Interest Daily Date Value Date Debit Credit Balancerate Interest 2N (#14) May 02, 2006 May 02, 2006 900.00 May 01, 2006 May01, 2006 8.000.00 May 01, 2006 May 03, 2006 10.000.00 2O (#15) May 01,2006 May 01, 2006 8.000.00 −8.000.00 May 01, 2006 May 03, 2006 10.000.002.000.00 May 02, 2006 May 02, 2006 900.00 1.100.00 2P (#16) May 01, 2006May 01, 2006 8.000.00 −8.000.00 6.00% −1.3151 May 02, 2006 May 02, 2006900.00 −8.900.00 6.00% −1.4630 May 01, 2006 May 03, 2006 10.000.001.100.00 0.50% 0.0151The daily interest calculation is based on a 365 year calendar base. Thesorting functionality is very similar to the one described above withrespect to FIGS. 2E and 2F.

The file set also includes an NPV rate master file as shown in FIG. 2U,which defines percentage values (along with including dates valid fromand until) for the final calculation of NPV as part of blocks 149 and151.

The file set also includes a VAT archive file as shown in FIG. 2R, whichstore VAT related entries generated in blocks 105 and 113. These entriesare sorted by date (FR02$) to generate the file of FIG. 2S. The systemcalculates the month end balance of the VAT entries of FIG. 2S. If themonth end balance is a credit, then the system creates a new entry thatrepresents the payment that will happen on the date designated for VATpaying to the tax authority. The system then resorts the file of FIG. 2Rto regenerate the file of FIG. 2S and moves to the next month. If themonth end balance is a debit, then there is no payment and the systemcontinues to the next month end date.

The file set also includes an allocation rule mater file as shown inFIG. 2X, which defines a formula for allocating net income (e.g., incomeafter the deduction of income tax) to distributed earnings, retainedearnings and possibly a reserve fund as part of block 145.

The file set also includes an income tax percentage master file as shownin FIG. 2Y, which defines relevant income tax percentages (along withincluding dates valid from and until) for the calculation of income taxas part of block 139.

As part of block 105, the forecasted sales are added as inflows to theevent archive file, with the operations making an automatic entry in thegross operating income calculation file of FIG. 2K. The sorted bankaccount file of FIG. 2N is updated by way of FL03$, #8,FH04$-FH06$-FH08$-FH10$-FH12$, #7, FG02$, FG03$ to FH11$, #14. That isto say that FL03$ is used to identify the number of the movement code inthe file of FIG. 2H (#8). The file of FIG. 2H (#8) is opened to retrievethe entry pointed to in FL03$. In FH04$, FH06$, FH08$, FH10$, and FH12$the system identifies the number of movement codes in the file of FIG.2G (#7). The file of FIG. 2G (#7) is opened to retrieve the entriespointed in FH04$, FH06$, FH08$, FH10$, and FH12$. In each of them, infile FG02$ there is the information if that particular entry will haveeffect on the bank account. If the answer is yes, then in fields FG03$to FG11$ the system finds the info to calculate the exact date thisimpact will take place. Then the entry is stored in the bank accountfile of FIG. 2N (#14).

As part of block 105, the inventory quantities that are required for thebeginning balance of each year of the investment period are stored alongwith appropriate movement codes. On the basis of the initial inventorybalances, an analytical list of movements of warehouse items (e.g., rawmaterial, packaging materials etc is calculated. This list is shown inFIG. 2E, which is sorted on the basis of the date of entry to generatethe sorted list of FIG. 2F. Up to this moment the analytical list ofmovements has only the sales (and possibly the beginning balance). Onthe basis of the stock level policy, which is portrayed in the masterfile of FIG. 2D (FD07$, FD08$, FD09$, FD10$, FD11$), the operationscalculate the purchases that must take place on a per item basis andautomatically creates entries in the events archive file of FIG. 2Lalong with the bank account file of FIG. 2N, the gross operating profitcalculation file of FIG. 2K, the VAT archive of FIG. 2R, and theinventory item list of FIG. 2E. The inventory list of FIG. 2E is sortedto generate the sorted inventor list of FIG. 2F, which is used todetermine the year end balance of each inventory item for the fiscalyear. Up to this moment, the gross operating profit calculation file ofFIG. 2K contains the sales, the beginning balance and the purchases ofthe year. The beginning and year end balances of warehouse items can bevalued through some generally accepted accounting method (e.g. meanaverage, FIFO etc). The result of this valuation is entered into thegross operating profit calculation file of FIG. 2K. At this point, thebalance of the gross operating profit calculation file of FIG. 2Krepresents the gross profit of the investment for the given year. Suchoperations are repeated for each successive year in the investmentperiod in order to calculate and store the gross profit for each year ofthe investment period (blocks 109-111).

As part of block 113, the forecasted expenses are added to the eventarchive of FIG. 2L, to the sorted bank account of FIG. 2N, and to theprofit and loss archive of FIG. 2Q by way of FL03$, #8, FH02$, #17. Thatis to say that FL03$ is used to identify the number of the movement codein the file of FIG. 2H (#8). The file of FIG. 2H (#8) is opened up toretrieve the entry pointed in FL03$. In FH02$, the system findsinformation that represents what percentage of the value of the movementgoes to the profit and loss account. Then the system creates the relatedentry in the file of FIG. 2Q (#17) with the calculated amount. Theforecasted expenses are also added to the VAT archive of FIG. 2R, and tothe expense list of FIG. 2V on the basis of field FH15$ of FIG. 2H.

As part of block 115, the operations automatically calculate and storefixed assets depreciations in the event archive list of FIG. 2L, in theexpense list of FIG. 2V and in the profit and lost archive file of FIG.2Q.

As part of block 117, the VAT archive file of FIG. 2R is updated by wayof FL03$, #8, FH04$-FH06$-FH08$-FH10$-FH12$, #7, FG12$, #18. That is tosay that FL03$ is used to identify the number of the movement code inthe file of FIG. 2H (#8). The file of FIG. 2H (#8) is opened to retrievethe entry pointed in FL03$. In FH04$, FH06$, FH08$, FH10$, and FH12$,the system identifies the number of movement codes in the file of FIG.2G (#7). The file of FIG. 2G (#7) is opened to retrieve the entriespointed in FH04$, FH06$, FH08$, FH10$, and FH12$. In each of theseentries, in file FG12$ there is the information if that particular entrywill have effect on the VAT calculation. If the answer is yes, then infields FG03$ to FG11$ the system finds the info to calculate the exactdate this impact will take place. Then the entry is stored in the VATarchive file of FIG. 2R (#18). The VAT archive file of FIG. 2R (#18) issorted to generate the sorted VAT archive file of FIG. 2S (#19). Thepayment dates (FR02$ and FS02$) are created after taking intoconsideration fields FG03$ up to FG11$. The system checks if at the dateof payment the balance is to be paid or to be carried forward for thenext statement of VAT, and it automatically updates the event archivefile of FIG. 2L and the bank account file of FIG. 2N. At this stage,other payments to the government and to other government relatedorganizations are calculated (e.g. Social Security, salary income tax,income tax on payment of freelancers, auxiliary social securityorganizations etc), with the exception of the income tax of the entity.The follow up of these issues calls for the creation of intermediaryfiles, as in the case of VAT.

As part of block 125, the operations sort, on the basis of the date, theentries of the bank account file of FIG. 2N to generate the sorted bankaccount files of FIGS. 2O and 2P. The sorted bank account files are usedto derive the daily balance adjustments and bank account interest andcredit calculations of blocks 125 through 131, and the operations createa corresponding entry in the event archive file of FIG. 2L, in the bankaccount file of FIG. 2N and the profit and loss archive of FIG. 2Q. Eachbank account interest payment and credit is recorded in field FB04$ andFB05$, respectively, of the calendar master file of FIG. 2B. The monthend bank account balance is used to calculate the tax contribution ofthe relevant law, such as the 128/75 tax of Greece (FI04$), if any, andthe operations create a corresponding entry in the event archive file ofFIG. 2L, in the bank account file of FIG. 2N and the profit and lossarchive of FIG. 2Q. The result per date is written in FB04$ and FB05$.Specifically, for the retaining of income tax from interest income(FI06$), the created movement (No 8 in the attached example of code listof movements of #8) will be taken into consideration later in thepayment of income tax for the fiscal year's earnings.

As part of block 139, the operations sort the profit and loss archive ofFIG. 2Q and automatically create the sorted profit and loss archive ofFIG. 2Z1. The balance of the last date of the fiscal year is the netprofit before taxes. The expense list of FIG. 2V is used to identify theexpenses that are income tax wise non-deductible, which is used toadjust the fiscal year balance of the sorted profit and loss archive ofFIG. 2Z1 to provide the total taxable income for the fiscal year. Thisresult is multiplied by the income tax rate identified in the income taxpercentage file of FIG. 2Y in order to find the total income tax that isto be paid for the fiscal year. A final income tax payment is calculatedthat is equal to the balance of the total income tax less the income taxinstallments paid during the fiscal year (FIG. 2C). The operations thenschedule income tax payments that are to be paid in the following year(preferably in accordance with a rule based on a predeterminedpercentage of total tax due in the current fiscal year) and create newentries for these scheduled income tax payments in the event archive ofFIG. 2L and the bank account file of FIG. 2N.

As part of block 143, the operations add to the net profit the sum oftax non deductible expenses (as found in the file of FIG. 2V (#22)) andarrives at a sum that is the basis for the income tax calculation, or inother words the taxable income. The information in the file of FIG. 2Y(#25) defines the rate with which the taxable income must be multipliedin order for the sum of income tax to be calculated.

As part of block 145, the operations follow the allocation rule definein the master file of FIG. 2X to allocate the net income (after taxes)to distributed dividends, retained earnings and a reserve fund. The netincome portion allocated to the reserve fund, if any, is added as anentry in the event archive of FIG. 2L and the reserve archive of FIG.2W. The net income portion allocated to distributed dividends, if any,is added as an entry in the event archive of FIG. 2L and to the bankaccount file of FIG. 2N. The net income portion allocated to retainedearnings, if any, is added as an entry in the event archive of FIG. 2Land to the retained earning file of FIG. 2Z2.

This procedure is repeated for successive fiscal years over theinvestment period.

As part of block 149, the operations discount (thru the use of the NPVrate file of FIG. 2U) the following specific sums into net presentvalues as of the date of the beginning of the investment plan:

-   -   1. The distributed dividends on the basis of their date of        payment, which are stored as entries in the events archive file        of FIG. 2L (#12), with the use of movement code number 11 in the        file of FIG. 2H(#8), as seen on examples of FIG. 2H (#8) in FIG.        3B.    -   2. The value of the reserve funds (FIG. 2W) on the basis of the        date of the end of the investment.    -   3. The value of retained earnings (FIG. 2Z2) on the basis of the        date of the end of the investment.    -   4. The commercial value (according to our evaluation) of the        remaining fixed assets (machinery, buildings etc) and the        remaining elements of asset (merchandise, raw material etc) on        the basis of the date of the end of the investment.    -   5. The balance of the bank account (FIG. 2N) on the basis of the        date of the end of the investment.    -   6. Any remaining derivative cash flows (payment of income tax        and payment of dividends) that remain to take place in the next        fiscal year, on the basis of the date that they will be        realized. For these cash flows, a basic calculation of NPV can        be used. A precise determination of financial cost (not        including the effect of compound interest) is not needed because        the differences are insignificant and do not essentially        influence the final result.

Finally, in block 151, a comparison is made between the first netpresent value result of block 149 and a second net present value resultcharacterizing the money payments (or possibly other items) that will bepaid/contributed to the investment over the investment period. Inparticular, each one of these money payments or other items isdiscounted to its net present value as of the starting date of theinvestment and added together to store a resultant sum, which is thesecond net present value result. The comparison of block 151 ispreferably realized by subtracting the second net present value resultfrom the first net present value result and outputting (e.g., by displayor by a printed report) the result to the user. If the result ispositive, the investment is profitable, while if it is negative it is aloss maker. The magnitude of the result characterizes the amount offorecasted profit (or loss) of the investment over the investmentperiod.

The computer-implemented investment evaluation application describedherein provides many important benefits over the prior artmethodologies, including, but not limited to:

-   -   i) accounting for bank account interest payments and credits as        well as bank account tax payments that may arise as the        investment collects monies (e.g., calculated inflows) and pays        monies (e.g., calculated outflows) over the investment period;    -   ii) allowing for allocation of the calculated net income into        predetermined categories (e.g., distributed dividends, retained        earnings, reserve fund) wherein certain categories (e.g.,        distributed dividends) contribute to the net present value of        the investment and other categories (e.g., retained earnings,        reserve fund) do not contribute to the net present value of the        investment over certain parts of the investment period;    -   iii) accurately accounting for calculated income taxes paid over        the investment period; and    -   iv) accurately accounting for value-added tax payments paid by        the investment over the investment period.        These benefits provide a greater degree of accuracy in modeling        the finances of the investment over the investment period and        thus provide decision makers with accurate information that can        be effectively used to determine whether or not to make the        investment.

There have been described and illustrated herein several embodiments ofa computer-implemented method for evaluating an investment and afinancial analysis application based thereon. While particularembodiments of the invention have been described, it is not intendedthat the invention be limited thereto, as it is intended that theinvention be as broad in scope as the art will allow and that thespecification be read likewise. Thus, while particular data structuresand formulaic expressions have been disclosed, it will be appreciatedthat other data structures can be used as well. In addition, whileparticular calculations have been disclosed for determining particularterms (such as costs of goods sold, gross profits, taxable income, netincome, etc.), it will be understood that other calculations can beused. Also, while particular calculations have been disclosed fordiscounting forecasted inflows and outflows to a net present value, itwill be recognized that other discounting-type calculations can be usedas well. It will therefore be appreciated by those skilled in the artthat yet other modifications could be made to the provided inventionwithout deviating from its spirit and scope as claimed.

1-33. (canceled)
 34. A computer-implemented method carried out by acomputer processing system for user evaluation of an investment over apredefined investment period comprising: storing data on the computerprocessing system, the data representing values and corresponding datesof a plurality of forecasted inflows and a plurality of forecastedoutflows over the investment period; processing the data on the computerprocessing system to calculate a plurality of first values based on thedata, said plurality of first values representing financial benefitsthat will be derived from the investment over corresponding intervals ofthe investment period, wherein the first values are derived fromcalculation of annual net income for the investment over the investmentperiod; generating a first net present value result on the computerprocessing system by discounting said plurality of first values; andstoring said first net present value result on the computer processingsystem for output to a user as part of evaluation of the investment. 35.A computer-implemented method according to claim 34, wherein: the firstvalues are derived from allocation of the annual net income into aplurality of predetermined categories, wherein at least one of saidplurality of predetermined categories contribute to said first values,and wherein at least another of said plurality of predeterminedcategories do not contribute to said first values over at least parts ofthe investment period;
 36. A computer-implemented method according toclaim 35, wherein: said plurality of predetermined categories include adistributed dividend category that contributes to said first values. 37.A computer-implemented method according to claim 35, wherein: saidplurality of predetermined categories include a retained earningscategory that does not contribute to said first values.
 38. Acomputer-implemented method according to claim 35, wherein: saidplurality of predetermined categories include a reserved funds categorythat does not contribute to said first values.
 39. Acomputer-implemented method according to claim 34, wherein: said annualnet income is derived by calculating bank account balances on a dailybasis over the investment period, the calculated bank account balancesreflecting the forecasted inflows and forecasted outflows over theinvestment period as represented by the stored data.
 40. Acomputer-implemented method according to claim 34, wherein: theforecasted inflows include values and dates for forecasted sales.
 41. Acomputer-implemented method according to claim 34, wherein theforecasted outflows include at least one of the following: ai) valuesand dates for inventory item purchases that are required to meetpredetermined constraints for the investment, aii) values and dates forfixed asset depreciations, aiii) values and dates for forecastedexpenses, and aiv) values and dates for forecasted tax payments.
 42. Acomputer-implemented method according to claim 34, wherein thecalculation of annual net income for the investment over the investmentperiod accounts for at least one of the following: bi) interest paymentsand interest credits using respective appropriate interest rates oncalculated bank account balances, bii) tax payments due on calculatedbank account balances, biii) value added tax payments, and biv) incometax payments.
 43. A computer-implemented method according to claim 34,wherein: the first values account for the value of at least one itemthat exists at the end of the investment period.
 44. Acomputer-implemented method according to claim 43, wherein: the at leastone item is selected from the group including a fixed asset, a reservefund, retained earnings, and bank account balance.
 45. Acomputer-implemented method according to claim 34, wherein: the firstvalues account for at least one derivative cash flow that will takeplace after the investment period.
 46. A computer-implemented methodaccording to claim 34, further comprising: processing the data on thecomputer processing system to calculate a plurality of second valuesbased on the data, said plurality of second values representing capitalcontributions to the investment over the investment period; generating asecond net present value result on the computer processing system bydiscounting said plurality of second values; and storing said second netpresent value result on the computer processing system for output to theuser as part of evaluation of the investment.
 47. A computer-implementedmethod according to claim 46, wherein: said capital contributionsinclude monies paid to the investment.
 48. A computer-implemented methodaccording to claim 46, further comprising: comparing said first netpresent value result and said second net present value result; andstoring a result of the comparing step on the computer processing systemfor output to the user as part of evaluation of the investment.
 49. Acomputer-implemented method according to claim 48, wherein: thecomparing subtracts the second net present value result from the firstnet present value result.
 50. A computer-implemented method according toclaim 48, further comprising: outputting the result of the comparingstep to the user for evaluation of the investment.